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Pursuant to a congressional request, GAO reviewed issues associated with the National Aeronautics and Space Administration's (NASA) International Space Station program, focusing on: (1) estimates of the station's development, assembly, and operations costs and comparing this estimate with the estimate in GAO's June 1995 report; (2) program uncertainties that may affect those costs; (3) potential debris tracking costs; (4) the status of program reserves; and (5) recent actions to measure prime contractor performance based on rebaselined information.

GAO noted that: (1) life-cycle cost is the sum total of direct, indirect, recurring, and nonrecurring cost of a system over its entire life through disposal; (2) overall, the estimated U.S. cost to develop, assemble, and operate the space station is about $96 billion, an increase of almost $2 billion over GAO's last estimate made in 1995; (3) development costs represent the largest increase--more than 20 percent; (4) the development increase is attributable to schedule slippages, prime contract growth, additional crew return vehicle costs, and the effects of delays in delivery of the Russian-made Service Module; (5) overall costs would have been significantly higher had there not been an offsetting reduction in shuttle support costs; (6) a number of potential program changes could significantly increase the updated cost estimate; (7) they include the potential or additional schedule slippage and the need for shuttle launches to test and deliver the crew return vehicle; (8) at the current estimated spending rate, the program would incur additional costs of more than $100 million for every month of schedule slippage; (9) in addition, NASA may have to incur costs related to protecting the station from space debris; (10) in August 1997, the agency updated its overall space debris tracking requirement; (11) the new requirement, as it relates to supporting the space station, includes the ability to track and catalog objects as small as 1 centimeter; (12) the adequacy of the space station program's funding reserves has been a concern of GAO's; (13) the program has used, or identified potential uses for, a significant portion of its available reserves, with almost 6 years left before the last assembly flight is scheduled to be launched; (14) in October 1997, NASA granted approval to Boeing Corporation to begin tracking cost and schedule performance using a new performance measurement baseline; (15) the purpose of the change was to incorporate updated program schedules to reflect the most achievable recovery plans; (16) for reporting purposes, the change had the effect of resetting cost and schedule variances to zero; (17) the original baseline shows that the February 1998 cost variance would have been about $50 million higher than the $398 million Boeing reported prior to the change; and (18) while NASA approved the new baseline for reporting purposes, it continues to use Boeing's estimate of overrun at completion--$600 million--as the basis for calculating the contractor's incentive award fee.